There is an element of “yeah, tell us something we don’t know” about the latest study into what fuels successful trading on the stock market.
Researchers have established a firm link between testosterone and earning power, but warned that too much can lead to irrational risk-taking.
The study confirms the stereotypes that have endured since the 1980s boom years.
But does it offer anything else?
John Coates and Professor Joe Herbert, of the Judge Business School at Cambridge University, studied the brains of City traders to discover what makes them tick – the cynics might suggest this wouldn’t have taken too long.
Yet there are important conclusions drawn from the study of testosterone levels and the impact on decision-making. Among lessons the research team is pushing is the need for trading floors to employ more women and older men who have lower testosterone levels and cooler heads.
Too much testosterone and younger male traders, riding on a winning streak, start to take irrational risks. There is then a direct link between made between this testosterone fuelled feeding frenzy and market crashes.
The researchers believe that high levels of the stress hormone cortisol, triggered by a rapidly falling market, inevitably leads to anxiety and clouded judgment. “You tend to see danger everywhere rather than opportunity,” he adds. “In that situation you don’t do anything.
“People get paralysed by the fear. [It] takes over so they are no longer thinking rationally. They are no longer doing the things that they should be doing to make money.”
So, for every boom it creates, testosterone is most likely behind every bust too.
Welcome to the global credit crunch, ladies and gentlemen.